tv Bloomberg Markets Americas Bloomberg April 24, 2018 10:00am-11:00am EDT
♪ vonnie: we are about 30 minutes into the u.s. trading session. u.s. stocks are higher and the 10 year treasury yield just hit since the first time 2014. it is what it means that matters. let's get straight to julie hyman with breaking economic data. julie: new-home sales coming out above estimates. -- a 4% sales for march gain on a month over month basis and the prior month was revised. we are getting the consumer board -- the consumer confidence board consumer confidence index. and an increase from the 1.27 reading in the prior months.
consumer confidence is relatively strong, housing is relatively strong. stocks holding steady for the moment with gains of about a quarter percent across the board because while we have these macro factors, we have a lot of earnings to consider as well. we have that 3% 10 year or at least almost 3%. we got a year at the 10 year with that 3% threshold and we rose to that level very briefly. right now, we are at 2.9939%. this shows the longer-term treasury chart with the highs and lows of each session. when it touched 3%. there is spirited debate about whether that is going to negatively affect stocks. 4% is now the threshold that is going to provide more of a speed bump. earnings is a big part of the picture today and i want to go
back to the bloomberg and look at what is going on with google. this is an odd looking chart. there is where the earnings came out and the stock spiked and ever since, it has been drifting lower to the point where it is down nearly 3%. the numbers beat estimates but the company is still spending to get there and not just on its core businesses, but spending to play catch-up in other businesses in which it competes with amazon and the like. saying that that spending is likely here to stay. elsewhere in technology, we are seeing something of a rebound, particularly with the chipmakers. chipmakersng the
there and citi calling it the macron of 2018 with -- the micron of 2018 with low sentiment. improved growth guidance for the year. a little bit of a bounce back in tech, excluding alphabet/google. mark: google is a mixed state for earnings in europe. lackluster european economic data. we were up earlier for a fifth day and now we are down for the second day. get to this massive earnings we have experienced. on the tech subject, ap increasing the sales outlook to reflect a major acquisition and increasing cloud business and accelerating cloud business. europe's biggest software
company benefiting from increased i.t. spending. new cloud bookings indicates future sales growth, growing by 25%. the chief executive is trying to .xpand the cloud-based services this is deutsche bank, shares also rising by 3.4%. it is considering cuts to its cash equities business in the united states as part of a restructuring according to people familiar. a retreat from that business in the u.s. were deutsche has -- where deutsche has struggled to compete with wall street. the big day is thursday when deutsche releases results. are we going to see a grand overhaul?
shares up by 3.6% ahead of the big earnings release on thursday. this is sterling against the dollar. the recent slide could be sterlingby the -- dropping about 3% versus the dollar since touching that post brexit vote high in 2017. the exit from the eu often seen as a risk for sterling but hopes of a softer breast -- brexit could rescue the pond -- rescue the pound from its bank of england woes. sterling rising against the dollar today for the first time in six days. back to the 10 year treasury yields. vonnie: we just crossed 3% for the first time since 2014. you heard julie hyman talk about it. atare back below it now
2.9992. level lots of different people talked about. now that we have breached it, does the selling pickup place? >> so far, we have seen the level hold. we have come back down just a little bit in yield, but the fact that it just got through. headlines are out, everyone can say this is not some sort of magical number that cannot be crossed. let's focus on the task at hand. auctions coming up in the next expectations are even is notpply coming, so 3% some line in the sand the cannot be crossed. we will probably cross it in the coming days and now we can sort of focus on the yield curve and all the other things that are going to impact the market. vonnie: apparently the next
pointis 3.05% at which the 3% would become a floor and not a ceiling. talk to us about volume because yesterday was not the most voluminous trading day. brian: the volume was not particularly high. withuestion is going to be auctions coming up, will volume pick up, will there be sort of an expectation of a large buying and selling flow coming in around these levels? i think we are looking forward to the auction and how that is going to take shape and whether the 10 year will react to the two-year touching 2.50 which is pretty crazy because that was a level we thought the 10 year could not cross. vonnie: we have backed off of those levels for both. year, 2.990.the 10
our thanks to bloomberg bonds reporter, brian chappatta. french president emmanuel macron and president are meeting in the oval office right now. this comes after an arrival ceremony for president macron and his wife. those are the pictures. we are joined now by kevin cirilli who is live at the white house. we have the pomp and circumstance. at what point do they down -- what -- at what point do they get down to real talk? kevin: right now and we are already seeing reaction out of tehran with regards to the united kingdom, france and other europeans coming together to urge president trump to reconsider his position regarding withdrawing from the iran nuclear disarmament deal. president trump has been quite critical of that deal. he says he wants a stronger iran nuclear disarmament deal. i want to pull up a quote from
the iranian president who says quote, we are sticking to our commitments more strongly than ever but if anyone wants to betray our nation or our deal, they should know that they would face severe consequences. up on capitol hill, several republicans i speak with, including those who speak -- who agree with president trump are arguing that maybe withdrawing would be the wrong decision. it would send a signal to north korea ahead of nuclear disarmament talks with north korean dictator kim jong-un. mark: we heard from sarah huckabee sanders yesterday it is unclear whether macron will be able to put pressure on trump when it comes to iran and other issues such as trade. the relationship is clearly close, but how much does that account for things when it comes to these big issues? kevin: it is remarkable to look at these two world leaders, both
of whom represent very different political constituencies. on the issue of syria and combatting the assad regime, both leaders are on the same page. when it gets down to economics, the bilateral trade negotiations that are developing between europe and the united states are very much still emerging. from president macron's perspective, he would like to exceptions tothe the steel and aluminum tariffs. president trump is open to the idea. that said, there is a strong contingency of republicans on capitol hill who are urging the andident to reconsider quite candidly, they are working with the business lobbying groups inside the beltway. vonnie: our thanks to kevin cirilli. be sure to tune in when president trump and macron hold a news conference in the next
hour. it is time for the "first word news." mark crumpton is here with that. in toronto sayes they are peers to be no national security connection that one of the country's worst mass killings ever but they are not ruling out anything yet. 10 people were killed when a van rammed into pedestrians on a crowded sidewalk. another 15 were injured. that suspect was arrested yesterday after a standoff with police. choice forrump's secretary of state is one step closer to winning confirmation from the full senate. cia director mike pompeo was surprisingly backed by a divided senate foreign relations committee. reversedn rand paul his earlier opposition under pressure from fellow republicans. the white house appears to be backing off its support for embattled epa chief scott pruitt. officials are cautioning republican lawmakers and other
conservatives to temper their defense of pruitt as he comes under fire for ethical lapses which include renting a room from the wife of a lobbyist. another sign of strong demand and scarce supply in the american housing market. home prices grew at the fastest pace since 2014. prices rose 6.8% over the last year. global news, 24 hours a day, on air and at tick toc on twitter, powered by over 2700 journalists and analysts in more than 120 countries. i am mark crumpton, this is bloomberg. vonnie: coming up, wells fargo executives face the music today as well as ceo tim sloan prepares to get an earful from angry shareholders. this is bloomberg. ♪
mark: live from london, i am mark artan. vonnie: and i am vonnie quinn. this is bloomberg markets. in seven hours, the wells fargo shareholders meeting gets underway in iowa. ceo tim sloan is facing angry shareholders and protesters and a recent $1 billion fine. we are joined from the site of the meeting in des moines. i understand there are actual protests being organized today that should start soon and lots of people on the march. laura: these protests are scheduled to begin pretty much right when the meeting starts at 10:00 central time. the protesters are amassing at
the library which is a few blocks away from here and they're going to be walking down andd avenue in des moines it sounds like they may even try to come into the hotel at the downtown marriott to give tim sloan a petition signed by 30,000 people calling for his ousting as well as all the board members. vonnie: the top shareholders are people like berkshire hathaway, vanguard, blackrock. how much of an impact can activist groups that own very small amounts of shares have? laura: exactly. we don't have the backing of some of these very large institutional shareholders, whether you are talking about wells fargo or any of our banks, you cannot get any of these proposals passed. you might see more support than you had thought because there are some activist shareholders involved who really care about
some of these issues. we were talking earlier with someone -- the comptroller of new york and he was actually a person who was able to get a proposal onto the ballot today where he was calling for having a study into the center practices at wells fargo to see whether that is something that could harm the bank in the future. vonnie: definitely a lot more of an era being loaned to these people. laura keller, thank you for the latest on wells fargo. banks.et's stick with the latest development out of deutsche bank. the lender naming a new coo. , the seniors banking analyst. is a lifer, he has been with the bank for over 30 years and he is german like
brittw ceo who replaced a 00 the news -- the new see -- the new coo replaces an 00 -- the new coo replaces an american. a return to internal experience rather than an outside perspective and it does mean a lot in the strategic outlook for the bank. ,ark: when it comes to turning are we going to see a big shift in the investment bank when we see the release of the quarterly results on thursday? steven definitely. i am pretty sure we will. maybe not so much a shift as a cut. ceo is likely to reveal his plans for a smaller investment bank. he is likely to shed some trading, especially in the u.s., including cash equities. we don't know how big it will be
but we expect a pretty significant or very large cut and that is likely on thursday. mark: what is sewing doing that the former ceo was not doing? steven he is not doing much. -- he is nowover assessing the outcome and presenting the results to shareholders. the old ceo was fired for poor implementation of the strategy. sewing was noted as being known will focus onand this stuff instead of unveiling something completely new. if he does unveil that new
investors turning sour as questions mount over iphone demand. spree, alphabet shows the companies willing to pay up in order to catch up. , theto break it all down bloomberg gadfly columnist to has called the end of the apple iphone super cycle. it is written in stone, now. you called it dead. : that is predicated on the idea that the super cycle even started. ultimately, iphone sales are flattening and iphone sales are flattening and apple is or has been able to keep revenue growing and charge higher prices and generate more sales through services. it does not mean the end is near for apple itself but it is not good news for the suppliers. apple is bringing more
and more in-house. at one point does it become very profitable for apple to do that in the margins expand again? suppliers lose out, but so what, for apple? alex: they might not be selling as many iphones, but they make more money for each iphone they sell. amf does not actually make the sort of chips apple can copy. they are not based in silicone. can -- silicon. sales are declining, so that is indicative. mark: a great piece. chunky bets on iphone components. 3-d sensors. was that a bad bet or is that going to pay off? alex: ultimately it will pay off. it might not just -- it might
just not be -- other phone makers are going to come into the 3-d sensors space. you have it on the iphone x and it is only sort of facing toward the user. you were going to have a rear facing camera in future models which will allow better augmented reality functions and not just in iphones. mark: google is clearly spending big to catch up with its rivals. can it close the gap? , it: in its core business is ahead by a country mile but in order to support that growth, and get its pause on useful data in order to continue that growth trajectory, it is trying to catch up with amazon with the cloud and apple with the iphones. google spends huge amounts of money and is able to spend money the way it is right now because it posted really high profits.
that makes it easier to justify spending the money now. mark: thanks to see you, alex webb on a busy week for technology. vonnie: president trump and macron are having a bilateral meeting. we are seeing some headlines trickling out on a ron. president trump -- on iran. president trump saying we will talk about it. also saying that the iran deal was insane and ridiculous. president macron will try to get him to re-sign that deal. this is bloomberg. ♪
trade officials meet again in washington and pushing to reach in after agreement. this after cabinet level members loud friday -- followed -- to stop the talks. we are joined with pablo goldberg. we just hit the 3% mark in the 10 year treasury, how much does that impact your vision? did you anticipate we would cross 3%? pablo: we had a sell out on emerging market data. the treasury at level is less important than the speed in which we got there. treasuries moved in november of last year to almost 290. then they fizzled off. now we are regaining momentum. very important, the speed for emerging markets. what is behind that?
it may be more of a dovish ecb. vonnia: we are seeing the dollar back to 91. it seemed like emerging-market currencies were dealing, what happens now? pablo: there are a lot out there where we are seeing the dollar. differentialpolicy tween the u.s. and other economies is set again as a driver for the dollar. in emerging markets where it very good and well behaved. moree are getting into tepid territory. vonnie: what is affecting what? is the rate affecting the dollar? is the rate increase affecting the dollar or are they moving separately? pablo: the rates are leading the
dollar. but it's not affecting it that much on the move in the first quarter of the year. rates in the u.s. went faster than the rest of the world. the dollar was not getting traction. now the differentials are moving up again. i think whether this will prevail or not will depend on other factors. particularly, what happens with growth in europe and with what the ecb will be doing soon. if they delay or phase out the idea of tapering, maybe we will have stronger dollar. between growthe and positive inflow into emerging markets, what derails it? pablo: there are two things that get into the markets. the gross differential. i do not think we will see a
derailment of that differential. i think the markets will continue to grow faster than the developed markets. would bederail it global financial conditions. this is what we are focusing on. the move to 3% means much, but whether it can be sustained. the other thing that would to relic would be drop in commodity prices. we are seeing oil firming up -- drop in commodity prices and we are seeing oil firming up. seeing chinese monetary tightening. we're seeing deceleration in chinese growth. that has been leading to financial conditions. we'll see how the chinese monitor the deleveraging of the economy with maintaining high growth. mark: what markets or strategies are you favoring right now? pablo: for the whole year, we
continue to like the local market. we continue to see the markets and whether this continues to for form -- perform well in emerging markets is higher in the developed markets. to see ratesee -- moving higher. we like more short duration strategies. corporate debt in emerging markets with higher yields. i think that the asset allocation situation is trying to understand whether we will have more impact and higher rates into the dollar or will we to the bearish trade. vonnie: i want to point out this function as emerging markets, and the top are the colombian and mexican peso, although they gave back.
what happened to those currencies going forward, particularly mexican peso since we don't know what will happen with nafta? pablo: these will be separate factors. the one factor is oil. oil is good for mexican and columbian peso. all it takes have been positive for the colombian peso. we have seen run-up toward the first round of elections in late may. it appears to be gaining and potentially taking an election in the first round. for the mexican peso, two factors. one side is the possibility of an early sign of a nafta agreement. you talked about that prior to us. is the elections in mexico. mexican are thinking about the election. we are more comfortable if we have checks and balances in place.
we need to see how that develops. so far, the base scenario is that nafta will be good. vonnie: let's talk about some level of hedging. give us a couple of ideas for regular investments -- investors. pablo: you can hedge it by having a portfolio of long bonds creditging or any selection that benefits short duration of emerging markets, high yield bonds. we like more high yield high-grade, particularly oil and higher yields. vonnie: in which countries? pablo: we like columbia and parts of rushing to -- russia, pakistan. vonnie: thank you.
thank you to pablo goldberg head of emerging market and that research. mark: let's check in with "first word news with mark crumpton. mark: the ceremonies are done. now it is down to is this for president trump and emmanuel macron. president and mrs. trump welcomed them to the white house this morning very a are is causing a number of items. president trump told reporters that he and president macron will discuss iran. let's go to the white house now and president trump. >> your country and your people come i thank you for a wonderful welcome. each time we work together to .rotect liberty and peace
we have a lot of challenges ahead of us. there is security and a lot of work to be done together. i am very pleased to do this. we have an excellent personal relationship. i want to thank you for that. pres. trump: we will talk about iran and many things. iranll be discussing the deal. i know the president wants to speak to me about that. we'll talk about the paris accord and various other things. we have not much time to do a lot of discussing. we have a very special
relationship. i don't imagine it has ever been closer in the history of our country's. -- countries. we will talk about a lot of subjects. we will talk about it and people know my views. it was a terrible deal. it never should have been made. we paid $150 billion and gave $1.8 billion in cash, actual cash, barrels of cash. that was insane and ridiculous and should never have been made, but we will talk about it. much.you very anybody else?
and look at the broader picture. pres. trump: it seems that no matter where you go, where there behind it. iran is now, unfortunately, russia is adding more and more involved. iran seems to be behind every thing where there is a problem. you just have to take a look at what is happening and the fighters. iran is always there. we are not going to allow certain things to happen that are happening. the iran deal is a disaster. they are testing missiles. you look at ballistic missiles they are testing their what kind of deal is it when you are allowed to test the souls all over the place? what kind of a deal is it when you don't talk about yemen and all of the other problems we have with respect to iran,
especially at what they are doing in iraq. he look at what is happening in virtually any place in the middle east, iran is behind it very what kind of deal is it? i know john kerry may be statement he did not want to discuss other things while making the deal, despite all of the money we gave them. he did not want to discuss it because it was too compensated. that is not the week to do it. we made a terrible deal. iran said they will start their nuclear program. not be sop: it will easy for them to restart it. if they restart it big problems. nuclear rowart the graham, they will have bigger problems than they have ever had before -- program now, they will have bigger problems than they have ever had before the thank you. you have been listening
to president trump and french president emmanuel macron. they are about to have a bilateral meeting. this was the beginning of the meeting. you heard the president saying there would be big problems for iran if their nuclear program is ever restarted and that the iran problem was insane and critically spared the crown -- insane and ridiculous. there is a news conference which we will bring you live. this is bloomberg. ♪
and barry ritholtz. richard thaler just said that you were for contrast affect. richard: to make ever but he looked rather -- better. there is a conversation later today. it should be interesting. anytime professor thaler comes into town, it is a privilege to chat with him. vonnie: congratulations hurray talk about the research you have done since her nobel prize. with spoke to a day or so ago. that date you reminded me that i spoke to you and the blurriness. 4:00 a.m. call you at , and/or a cell phone rings and on the cell phone it says sweden.
that is not common. nor is it common for my phone to ring at 4:00 a.m. that begins the craziest day of your life. there are reporters outside your others that are somehow getting through, including you. once they convince you it is not a hoax, they tell you to get ready that there is a press conference in 45 minutes. vonnie: one thing you have been working on since then is the nfl draft, which is thursday. -- one of thet biggest boarding events of the whole season pair what have you tell whod that you can has the first four picks? richard: this is not research i have but would -- been doing the past couple months, but an ongoing topic. and wer student of mine
found that there is too high of a value of picking early. for example, the jets had the number six pick, and tdetrade wo the number three pick. they moved up three spots. for that, they gave up three second round picks. that we did,is second round picks are gold. those are the value buys in the draft. vonnie: wide? sometimes teams picked the wrong player anyway. richard: that is the point, and these are way cheaper. they are much cheaper and almost as good. if you can have three guys that are almost as good and those three cost about the same as the one guy, we know that it is good to have lots of picks.
especially when the outcome is unknown. wasof the first books written, and what was the first paper called? what is the losers curse? richard: the curse is that the browns who were the worst human football last year had the first pick. the browns are interesting a they were terrible on the field. for the past couple of years, they have been brilliant at the trading of picks because a have the first and the fourth pick. in the second round, they have two other picks. they knew there were quarterbacks coming and they wanted to have ammunition. now we will see whether they are smart about it. ,arry: so five years from now
the browns can be a contender? richard: they could beat if they choose wisely and are lucky. vonnie: one of the presenters yesterday talked about how nobody except for a trainer could see that the horse was going to be what he became and it was after 1000 tests that he found that the left ventricle was bigger than the right and that makes a difference in resources. when it comes to nfl picks, why do people make such wrong mistakes and maybe do their team a disservice? richard: it is because it is very hard. half of the first picks fail. suggests that no teams are any good at this, even your beloved patriots. --re is no
no team has historically been better than anyone else at choosing the players. brilliantts looked that they have tom brady, but they took him in the sixth round . it is not like they knew he was owing to be great. at the end of the draft, you are taking the and praying. vonnie: let's move to markets. 3% on the 10 year. ?hat does this mean does this for bode something for the rest of the year? richard: round numbers mean nothing. vonnie: what will it cause people to do psychologically? richard: who knows? they could say interest rates are finally going up i'm at which everyone, including barry
and i, have been predicting for the past decade and have been wrong. eventually, we will all be right about this. maybe we will look back and see you when it broke 3%, that was the sign. that interest rates have to go up at some point. we have been wrong forever. how fast they will go up or whether they will go down, we don't know. barry: the most fascinating thing about 3% is that the fed has been saying we want to get of emergency footing. there are signs of inflation and signs of wages ticking up. it should not come as a surprise that bond yields are moving up as the fed is now three or four increases into what could be a long, slow tightening cycle. vonnie: the most burning question that you have for the nobel prize winner? my favorite question is
how long does it take for your life to get back to normal after the nobel prize? we can ask that again. i don't know that it ever gets back to normal. say that most of the people that win a nobel prize have already been really lucky in life. it all of the sudden does not turn you into anybody any smarter area your wife -- smarter. your wife and her colleagues do not think you are any smarter. for every guy -- lucky guy like me who wins, there are a couple hundred who are cursing at their cell phones for not ringing.
fact that i won made some of them even matter. i don't know whether overall utility went down. richard, i have to ask you about the fiscal position. are you concerned about the direction the u.s. economy is going, whether the fiscal position we are going to be in or inflation growth? what is most concerning? richard: what is most concerning been usingat we have the opposite of the right fiscal strategy since 2008. what should we have done in 2008? barry: it is obvious. richard: we had massive unemployment and negative interest rate varied we should have been building, building, rolling, ridges, schools, every
kind of infrastructure and we should have been building its on the cheap with unemployed construction workers. no, we don't do that and we do a tiny bit for a year or two. are finally at full employment. all the guys are back to work. we decide to run a big deficit area -- deficit. vonnie: do you see any behavioral economics behind that question mark what works are you doing to explain that? richard: -- behind that? what are you doing to explain that? richard: there are very few politicians who have real principles because the same -- this is not about finance, but take the bombing in syria. when obama did something similar, the republicans all
said he should go to congress for permission. when trump did the same thing, all of the democrats are saying he should go to congress and i don't know -- congress. i don't know -- frankbarry: you are saying we hn agency problem? richard: they are not acting in our best interest. vonnie: we have to leave that. it is too bad you both have to be back. we are which richard thaler and barry ritholtz. we have more next. this is bloomberg. ♪
for bloomberg markets. ♪ here are the top stories we are covering. emmanuel macron meets with president trump at the white house. will he be able to win the concessions that europe is looking for we will air from both leaders at a joint news conference this hour. -- here from both leaders at a joint news conference this hour. we had the 3% level and the 10 year. it is due to tech earnings. semiconductors winning out. ♪ european equities, stocks are lower up your we were up earlier.